Registering a legit sole proprietorship in Texas can be a confusing process when you aren't sure where to start. There are several steps to take, but knowing what order to take them in is vital if you don't want to waste a lot of time fixing mistakes. Here is a step-by-step process to help guide you on your journey to being in business for yourself, whether you want to monetize a hobby or take your expertise from the corporate world into your own hands.
Items you will need
- A name for your business
- Internet Access
Decide on a DBA, or "Doing Business As" name. This will be the legal name of your company.
Locate the County Clerk for the county in which your business is based. For most sole proprietorships, this will be your home, unless you have a separate business address. If you are mobile, you will use your home address. You can go to your county's website to locate the phone number and address of the County Clerk. Visit the County Clerk during business hours to register your DBA with them, which typically costs $10 or less.
Visit http://www.window.state.tx.us/taxpermit/ to register your business with your DBA as a sole proprietorship and receive a tax exempt number and certificate. This allows you to make purchases for your business without paying sales tax. There is no charge to do this.
Visit http://www.IRS.gov, and go to the "Businesses" section of the site. Choose the "Employer ID Numbers Topic", and then choose "Apply for an EIN Online". From that page you will choose "Apply Now", and go through the application. This will give you a number to use in place of your social security number for business tax purposes. There is no charge for this.
That's it! You now have a legit registered business. Just remember to save all of your receipts to use at tax time, and keep really good records of all incoming and outgoing monies and inventory.
You might want to think of an extra DBA before going to register, just in case yours is already taken. This goes by the county your business is in, so as long as no one else in your county has registered the same DBA, you can use it. The cost to register a DBA may vary by county, so give them a call first to confirm the price.
Though you can use your social security number instead of an EIN with a sole proprietorship, you open yourself up to possible identity theft by giving it out more often. Use of an EIN is highly recommended.